​The Biggest Procurement Challenges in 2025 — And How Smart Leaders Are Tackling Them

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During Q1 1st Executive explored the issues that have been identified as key challenges for our network of CPO’s and Supply Chain Directors globally. The last 12 months have been a masterclass in resilience for global supply chains. From geopolitical tensions to economic volatility and the ever-rising bar for sustainability, Procurement leaders are walking a tightrope between cost, risk, and long-term value.

So what’s ahead for the remainder of 2025?

Here are the top challenges Procurement teams are facing — and how the most forward-thinking leaders are preparing for them. 👇

🌍 1. Geopolitics Are Reshaping Supply Chains:

U.S. tariffs on EVs, semiconductors, and steel. Rising protectionism. Unstable trade routes.

Procurement teams are being forced to diversify sourcing and rethink supply network strategies—fast.

But diversification isn’t cheap. Terminating supplier contracts, building new inventory buffers, and transforming supply models all require capital and time. Budget shockwaves are inevitable.

💰 2. Rising Costs, Shrinking Margins:

Inflation, labor costs, and logistics pressures are squeezing every part of the value chain.

And the mandate from the top is crystal clear:

“Do more with less — and faster.”

In industries like automotive, 2025 is shaping up to be brutally competitive. Expect consolidation. Expect bankruptcies. Expect Procurement to be on the front line.

🌱 3. Sustainability Isn't Optional — Even If It's Uneven

Yes, ESG adoption is divided globally.

But for many leading organizations (Maersk is a good example), ESG remains non-negotiable — even when short-term pressures mount.

Now more than ever, Procurement must hold the line.

🌍 Bring ESG to supplier agendas.
📌 Stick to commitments made before politics shifted.
🧭 Play the long game.

👥 4. The Skills Gap Is Real:

Traditional sourcing skills don’t cut it anymore.

What’s needed:
✅ Strategic thinking
✅ Data-driven decision making
✅ Agile negotiation
✅ Change leadership
✅ Risk and stakeholder management

And yes — an entrepreneurial mindset. That can’t be taught overnight. It’s built through navigating uncertainty, leading transformation, and learning the hard way.

🤖 5. Tech? Yes. But With Purpose:

AI gets all the headlines, but many procurement teams (especially in sectors like automotive) aren’t there yet. And that’s OK.

Real innovation is happening through practical wins:
🔍 Better P2P visibility
📊 Smarter spend tracking
📁 Structured contract change management

These tools are strengthening commercial resilience today, not just in theory.

🔗 6. Procurement Can’t Operate in a Silo:

With new CEOs and CFOs stepping in, the internal spotlight is intense.

Procurement needs to align with:
💡 Finance (on savings + investment trade-offs)
📦 Ops (on delivery + risk)
📣 Marketing (on brand + ESG perception)

2025 priorities are clear:

• Cost savings (targets are up!)

• Customer support & feedback

• Risk mitigation

• Sustainability

Cross-functional visibility and collaboration are now mission-critical.

🔑 Final Word

Procurement isn’t just about savings anymore. It’s about navigating complexity, building resilience, and creating long-term value. The teams that will win in 2025 are those that don’t just react — they lead.

Given all of the above it is key that Procurement truly partners with the business to achieve strategic pillars. How Procurement best partners with its stakeholder community is something which has been asked for years, but the fact that this topic has been there for more than a decade highlights its complexity.

For our next market insights report, we’re asking: What is business partnering? Procurement have been saying they need to do it better for the past 10 years, but does anyone have a winning formula?